European politics had an eventful weekend as Emmanuel Macron’s party was defeated in the Paris mayor’s race and Green Party candidates won in several other major cities turning French local elections into a warning for the president. Polish voters denied President Andrzej Duda’s bid for quick re-election, forcing him into a runoff that puts in doubt a nationalist makeover of the eastern European country which has been often at odds with the EU bloc. Meanwhile, Iceland reelected its president, rejecting a right-wing challenger. The pound started the week higher against the dollar as traders also eye the latest meeting between top negotiators from the European Union and U.K. on a trade pact, with just a few days left to extend the Brexit transition period if needed. The euro was firmer against sterling buying 91.1 pence. A fresh round of talks is due to begin this week. This week, investors are looking to eurozone confidence data and German inflation figures for the latest gauge of the region’s economic health.
The dollar struggled to make headway this morning and riskier currencies inched ahead as investor sentiment swung between hopes for a global economic recovery and fears that a fresh wave of coronavirus cases could undermine the revival. The trade-exposed Australian and New Zealand dollars rose about 0.2% to near the middle of recent ranges. The Aussie, which has gained nearly 25% from a more than 17-year low hit in March, was last up 0.2% at $0.6869. The kiwi rose by the same margin to $0.6428. The USD eased back to 107.08 yen, though it remained well within the recent range of 106.06 to 107.63. In commodity markets, gold touched a record peak since early 2012 at $1,773 an ounce.
Markets began the week with a cautious tone as the relentless spread of the coronavirus finally made investors question their optimism on the global economy, benefiting safe harbour bonds and crimping oil prices. European shares edged higher as investors clung to hopes of a quicker economic recovery in the continent even as coronavirus cases surged globally. The pan-European STOXX 50 index rose 0.2% after opening in the red, lifted by automakers and travel & leisure companies. The S&P 500 eased 0.2% as Wall Street faltered on Friday with some U.S. states reconsidered their reopening plans. The global death toll from COVID-19 reached half a million people on Sunday. The first half of the year is drawing to a close and there's a case building for European equities to continue a rare outperformance over peers in the U.S. The Euro Stoxx 50 Index has performed better than the S&P 500 since mid-May and is on track to beat Wall Street for the first full month since September.